There's a growing debate about what is put inside your fuel pump. At the heart of the debate is a two-carbon alcohol -- ethanol. This little fuel is creating a huge debate, which has divided the farming industry and raised perennial questions regarding the cancerous influence of special interest on the U.S. federal government.

I. Big Corn Makes Friends

When it comes to corn ethanol the message from Congress is clear: cut down on the ethanol production. But the U.S. Environmental Protection Agency (EPA) is still waffling on whether to keep its strict quotas, or to "temporarily" relax them, after the worst drought in decades hit parts of the U.S.

With the drought hurting corn yields, farmers have been forced to compete with ethanol producers and the food industry for an insufficient supply. Some farmers have, in their desperation, turned to feeding their cows candy, as cast-off bulk sprinkles are cheaper than the traditional corn feed.

The EPA's holds a tight grip on the amount of corn going into ethanol, thanks to its ability to regulate fuel in the U.S. Under The Energy Policy Act of 2005 (often referred to as the Renewable Fuel Standard), which passed under President George W. Bush, fuel blenders are required to incorporate a certain amount of ethanol into gasoline blends at the pump, with the amount being bumped a little bit each year.

The U.S. government mandates ethanol be blended into gasoline, to create artificial demand for corn. [Image Source: Nation Corn Growers Assoc.]

In Congress' case, it appeared to be largely special interests. Senators and representatives from corn farming-heavy districts/states accepted funding from farmers to help them get elected, and in turn pushed for the seemingly illogical ethanol blending requirements, which create artificial demand, driving corn prices up. They also for some time passed billions in subsidies along to big corn farmers.

But the ethanol special interests saw their grasp on Congress weakening last year amid the partisan rancor regarding the budget. In a battle by each side to preserve their special interests, corn found themselves too short on the special interests pecking order to convince Congress at large to continue to vote for bloated subsidies.

But even the EPA -- who seemed firm on its ethanol commitment -- has started to show signs of doubt after an entirely external, non-political influence hit -- the drought. The record drought is essentially forcing the EPA's hand, by creating corn shortages and hence amplifying corn ethanol's already undesirable price effects.

The EPA announced it would make its decision [PDF] about a potential waiver on blending requirements early next month.

Amid a record drought either the quota or jobs will be lost, say many farmers.
[Image Source: AP]

Eight state governors and 200 members of Congress have written a letter (on behalf of the slightly ironically named National Pork Producers Council) to the EPA pleading with it to relax blending rules via a waiver, at least for the rest of the year. Delaware and Maryland's governors write that without a waiver the EPA would be creating "the loss of thousands jobs."

Corn farmers are opposed to the idea, which would reduce the artificial demand that they currently enjoy. The National Corn Growers Association essentially admits that it's acting out of greed, but making the argument that higher revenue from corn farmers stimulates the economy in a trickle-down effect. They point out that corn farmers' revenue rose from $63B USD to $90B USD between 2007 and 2012.

They comment [PDF], "Higher feed prices are only one piece of a complicated economic puzzle... [a waiver would cause] severe harm to the economy."

Big corn argues that its profits are worth more than whatever job savings might be realized by quota cuts. [Image Source: Agriculture.com]

Before the drought corn prices had increased nearly four-fold from 2007 levels. The fuel supply industry was set to (by EPA requirement) deliver 15.2 billion gallons of corn ethanol this year -- up from 5 billion gallons in 2007.

But the payday for big corn may soon be over. After all, the Obama administration has a relatively substantial degree of control over the EPA -- a federal agency -- and it may be wary of refusing the waiver request, lest it trigger the predicted job loss and hurt the President' reelection prospects.

what most of you don't realize, as well as the person who posted this article doesn't put in it. is the type of corn we use for the fuel. field corn. inedible by humans and used only for livestock.

what is also not posted is that vehicles that are "flex fuel" aren't really properly adjusted for e-85.

e-85 has a much higher octane rating(in the neighborhood of 105-110 octane), burns cooler, and cools the intake charge. the ideal compression ratio of e-85 is something in the neighborhood of 13-15:1 or so. your standard road going car that most vehicles are flex fuel, are nowhere near this compression ratio as they're also designed to run on the cheapest fuel at 87 octane or lower and run a compression ratio of 8-9:1.

thus you cannot even fully extract the potential energy.

we need to have e-85 only vehicles to truly get the maximum out of this new fuel.

Field corn is not inedible, it just doesn't taste as good and isn't as tender.

Hello. We eat the livestock and their milk.

The compression ratio is not nearly as important with new turbocharged engines. The turbo boost can be varied depending on fuel type much more easily than changing compression ratios, so there isn't much point in designing e-85 only engines. In any case, there simply isn't enough ethanol production to make that viable.

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